In fresh trouble for Byju’s, the Supreme Court on Wednesday set aside the order of the National Company Law Appellate Tribunal (NCLAT), which closed the insolvency proceedings against the crisis-hit edtech giant accepting a settlement of about Rs 158 crore dues between Think and Learn Pvt Ltd (the owner of Byju’s) and the Board of Control for Cricket in India (BCCI).
A bench headed by Chief Justice D Y Chandrachud also reversed the order of the NCLAT approving Byju’s Rs 158.9 crore dues settlement with the Board of Control for Cricket in India (BCCI).
It directed the cricket board to deposit the settlement amount of Rs 158.9 crore with a committee of creditors.
The bench, also comprising justices J B Pardiwala and Manoj Misra, delivered its verdict on an appeal by US firm Glas Trust Company LLC against the NCLAT order.
Observing that the NCLAT did not apply its mind while closing the insolvency proceedings against the ed-tech major, the bench ordered fresh adjudication in the case.
The NCLAT, on August 2, granted relief to the embattled ed-tech firm by setting aside the insolvency proceedings against it after approving its Rs 158.9 crore dues settlement with the BCCI.
The NCLAT verdict had come as a huge relief for Byju’s as it had effectively put its founder Byju Raveendran back in control of the company’s finances and operations.
However, the relief remained short-lived as the top court, on August 14, termed the NCLAT verdict “unconscionable”.
It also stayed the operation of the NCLAT order while issuing notices to Byju’s and others on the appeal of Glas Trust Company LLC, the ed-tech firm’s US-based creditor, against the judgement of the insolvency appellate tribunal.
The Byju’s Crisis: A Short Timeline
2011-2022: Rise to Prominence
Established in 2011, Byju’s quickly gained prominence and became India’s most valuable startup with a peak valuation of $22 billion in 2022. The company revolutionized education with its innovative learning app, serving students from primary school to MBA aspirants.
April 2023: Legal Troubles Begin
In April 2023, Byju’s faced significant legal troubles when the Enforcement Directorate (ED) conducted searches and seized various ‘incriminating’ documents and data, marking a major setback.
May 2023: Valuation Cut by BlackRock
Following these legal issues, BlackRock cut Byju’s valuation to about $8.4 billion.
Financial Year 2021-2022: Unveiling Financial Struggles
The company’s overdue financial results for the fiscal year ending March 2022 revealed a substantial net loss surpassing $1 billion.
September 2023: BCCI Files Insolvency Petition
The BCCI had filed an application under Section 9 of the IBC, 2016, in the Bengaluru bench of NCLT seeking to initiate the Corporate Insolvency Resolution Professional (CIRP) against Byju’s for defaulting on dues of Rs 158 crore. The case pertains to the dispute around the sponsorship rights of the Indian cricket team’s jerseys.
November 2023: Further Challenges and Valuation Cut
In November 2023, Byju’s reported trimming its operating losses by 6 per cent in 2021-22 for its core online education business, with revenue more than doubling. However, the Enforcement Directorate issued a show-cause notice for an alleged Rs 9,362.35 crore violation under the Foreign Exchange Management Act (FEMA).
During the same month, tech investor Prosus NV substantially cut Byju’s valuation to under $3 billion, citing the company’s struggle with governance and cash flow problems.
January 2024: BlackRock Slashes Valuation
Finally, in January 2024, BlackRock slashed Byju’s valuation by 95 per cent to $1 billion amid media reports of Raveendran pledging his homes to pay staff, following the exit of several Byju executives and board members due to delays in filing the company’s 2021-22 financial results.
June 2024: HSBC Cuts Byju’s Valuation to Zero
Financial services giant HSBC slashed the valuation of edtech company Byju’s to zero, as compared with the company’s valuation of $22 billion in 2022. HSBC in its note said it has assigned zero value to Byju’s stake due to multiple legal cases and funding crunch.
July 2024: NCLT Admits BCCI Petition
The National Company Law Tribunal admitted BCCI’s petition seeking insolvency proceedings against Byju’s related to the company’s default on dues of Rs 158 crore under their sponsorship contract for the Indian cricket team.
August 2024: Financial Troubles in US
Byju’s financial troubles escalated when US lenders approached India’s Supreme Court in August, alleging improper use of a $1 billion loan by Byju’s. The Supreme Court is yet to rule on Glas’s grievances in dispute with Byju’s.
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